Apple bruised as buyers opt for Microsoft

Ben Woodhead (AFR) |
Dec. 18, 2008

PC buyers opted for cheaper Windows-powered devices, pushing purchases of machines running the Microsoft operating system up 7 per cent year-on-year in November.

SYDNEY, 18 DECEMBER 2008 - Consumers are showing that the global financial crisis is dulling their appetites for premium information technology products with sales of Apple computers in the US flatlining last month.

Instead, PC buyers opted for cheaper Windows-powered devices, pushing purchases of machines running the Microsoft operating system up 7 per cent year-on-year in November, according to market researcher NPD Group.

The shifting spend in part reflected Apple's reluctance to discount heavily in the lead up to Christmas despite rapidly deteriorating consumer sentiment that has led many IT vendors to slash earnings forecasts.

It raised eyebrows yesterday when it announced chief executive Steve Jobs, whose health remains a subject of constant speculation, would not deliver his traditional keynote speech at the Macworld computer conference in January. It also said 2009 would be the last time Apple would appear at the event.

Mr Jobs's absence from Macworld led to speculation the company had no major product announcements with which to kick off the new year - a potential problem for the vendor. NPD analyst Steve Baker said that the computer maker's ageing range of desktop Macs was a major drag on its November performance.

Last month, desktop Mac sales slumped 38 per cent year-on-year compared to a 15 per cent decline in sales of Windows machines. Apple laptop sales were up 22 per cent year-on-year, as against a 15 per cent rise in sales of mobile computers loaded with Microsoft's operating system.

The weak performance from Apple Macs compared to Windows computers in November closely followed a downgrade of Apple by Goldman Sachs analyst David Bailey, who on Monday cut the stock from "buy" to "neutral" amid fears soft spending would hurt earnings.

"Some nicks have started to emerge," Mr Bailey wrote in a research report.

Before November, many observers had thought Apple was better placed to ride out the economic storm than many of its rivals, but investors have grown wary of the stock, which is trading down 50 per cent over the year.

The trendy electronics maker is not the only technology company suffering as shoppers around the world tighten purse strings.

The decline in desktop computer sales in November backed recent forecasts from market researcher IDC that global PC sales will fall as much as 5.3 per cent to $US267 billion ($386 billion) during 2009.